Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System -- National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 Registration Information (NI 33-109) and Derivatives Regulation (Québec) -- relief from certain filing requirements of NI 33-109 and Derivatives Regulation (Québec) in connection with a bulk transfer of business locations and registered individuals pursuant to an asset purchase in accordance with section 3.4 of Companion Policy 33-109CP to NI 33-109.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System/

National Instrument 33-109 Registration Information and Companion Policy 33-109CP/

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions/

Derivatives Act (Québec) and Derivatives Regulation (Québec).

March 4, 2014

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND QUÉBEC

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF DUNDEE SECURITIES LTD. (DSL) AND RICHARDSON GMP LIMITED (RGMP) (the Filers)

DECISION

Background

The principal regulator in Ontario has received an application from the Filers for a decision under the securities legislation of Ontario (the Legislation) for relief from the requirements contained in sections 2.2, 2.3, 3.2 and 4.2 of National Instrument 33-109Registration Information (NI 33-109) pursuant to section 7.1 of NI 33-109 to allow the bulk transfer (the Bulk Transfer) of the securities registration of certain dealing representatives (the Representatives) and their respective locations at RGMP in Montreal, Ottawa, Toronto, Calgary, Vancouver and Victoria to DSL, on or about March 14, 2014 (the Closing Date), in accordance with section 3.4 of the Companion Policy to NI 33-109 (the Exemption Sought).

The securities regulatory authority in Québec (the Derivatives Decision Maker) has received an application from the Filers for a decision under the derivatives legislation of Québec for relief from section 11.1 of the Derivatives Regulation (Québec) pursuant to section 86 of the Derivatives Act (Québec) to allow the Bulk Transfer of any Representatives registered under Québec derivatives legislation and their respective locations at RGMP in Montreal, Ottawa, Toronto, Calgary, Vancouver and Victoria to DSL, on the Closing Date, in accordance with section 3.4 of the Companion Policy to NI 33-109 (the Derivatives Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a hybrid application):

(i) the Ontario Securities Commission is the principal regulator for this application;

(ii) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each jurisdiction of Canada outside of Ontario (together with Ontario, the Jurisdictions);

(iii) the decision with respect to the Exemption Sought is the decision of the principal regulator; and

(iv) the decision with respect to the Derivatives Exemption Sought evidences the decision of the Derivatives Decision Maker.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

DSL

1. DSL is a corporation incorporated under the Business Corporations Act (Ontario) and has its head office at 1 Adelaide Street East, Suite 2100, Toronto, Ontario M5C 2V9.

2. DSL is registered as an investment dealer in all of the Jurisdictions and is also registered as a derivatives dealer in Québec.

3. DSL is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and is approved by IIROC to carry out business in the categories of securities, options and managed accounts.

4. DSL is not in default of the securities legislation in any of the Jurisdictions.

RGMP

5. RGMP is a corporation amalgamated under the Canada Business Corporations Act. The head office of RGMP is at 145 King Street West, Suite 500, Toronto, Ontario M5H 1J8.

6. RGMP is registered as an investment dealer in all of the Jurisdictions and is also registered as a derivatives dealer in Québec.

7. RGMP is a member of IIROC and is approved by IIROC to carry out business in the categories of securities, options and managed accounts.

8. RGMP is not in default of the securities legislation in any of the Jurisdictions.

Acquisition

9. DSL and RGMP have entered into an asset and share purchase agreement dated as of the 13th day of January 2014 whereby RGMP has agreed to transfer the employment and the client accounts of approximately 90 dealing representatives (the Transferred Employees) to DSL on the Closing Date. The Transferred Employees were recently transferred to RGMP in connection with its acquisition of Macquarie Private Wealth Inc.

10. In addition, DSL will be acquiring the offices (including the relevant lease of space and certain equipment and furniture located in such space) at which some of the Transferred Employees work in Montreal, Ottawa and Victoria. At the time of the Bulk Transfer, all of the employees working in such acquired offices will be Transferred Employees.

11. Sub-branches will also be established by RGMP in Toronto, Calgary and Vancouver and the Transferred Employees in those locations will be transferred to the sub-branch in that city prior to the Closing Date to facilitate their transfer to DSL as part of the Bulk Transfer.

12. To ensure that the Bulk Transfer occurs seamlessly, DSL and RGMP have agreed, subject to IIROC approval, that the Transferred Employees in RGMP's Calgary and Vancouver offices will be moved to new segregated space in DSL's offices in Calgary and Vancouver prior to the Closing Date. Such segregated space in Calgary and Vancouver will have appropriate RGMP signage, and other than internet connectivity, the Transferred Employees in such locations will not interact with DSL prior to the implementation of the Bulk Transfer.

13. DSL and RGMP have also agreed that DSL will provide internet connectivity to the Transferred Employees in Montreal, Ottawa, Calgary, Vancouver and Victoria prior to the Closing Date to assist in facilitating the Bulk Transfer on the Closing Date. Appropriate confidentiality and non-disclosure agreements will be put in place and the Transferred Employees in such locations will not have any access to DSL's systems, and DSL will not have any access to RGMP's systems, prior to the Closing Date other than the internet connectivity (i.e., the Transferred Employees in such locations will access RGMP's systems remotely from such locations).

14. On, or immediately prior to, the Closing Date, subject to IIROC's approval, which shall be sought by means of a separate application (the IIROC Approval), the employment agreements of the Transferred Employees will be assigned to a wholly-owned subsidiary of RGMP without the need for a formal agency agreement between RGMP and the subsidiary. As part of the transaction with RGMP, DSL will acquire all of the issued and outstanding shares of the subsidiary on the Closing Date, which will then be amalgamated with DSL immediately after the closing of the transaction, on or about March 15, 2014.

15. Effective on the Closing Date, all of the registrable activities of the Transferred Employees will be transferred from RGMP to DSL. Subject to obtaining the Exemption Sought, the Derivatives Exemption Sought and the IIROC Approval, no disruption in the services provided by the Transferred Employees to their clients is anticipated as a result of DSL acquiring the employment agreements and client accounts of the Transferred Employees.

16. The senior management and operations of RGMP and DSL will not change as a result of the transfer of the Transferred Employees.

17. Pursuant to section 14.11 of National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations, a notice has been mailed to the clients of the Transferred Employees advising them of their right to close their account at least 30 days prior to the Closing Date.

18. A press release will be issued immediately after the Closing Date confirming the acquisition of the Transferred Employees by DSL.

Submissions in support of exemptions

19. Neither the Exemption Sought nor the Derivatives Exemption Sought will have any negative consequences on the ability of DSL or RGMP to comply with any applicable regulatory requirements or the ability to satisfy any obligations in respect of the clients of the Transferred Employees.

20. Given the number of Transferred Employees that will be transferred from RGMP to DLS on the Closing Date, it would be unduly time consuming and difficult to transfer each of the Transferring Employees to DSL through the National Registration Database (NRD) in accordance with the requirements of NI 33-109 if the Exemption Sought and Derivatives Exemption Sought are not granted.

21. Both Filers are registered in the same categories of registration in the same Jurisdictions, affording the opportunity to seamlessly transfer the Transferred Employees and the affected business locations on the closing of the transaction by way of Bulk Transfer and thereby ensure that there is no interruption in registration.

22. At the time of the Bulk Transfer, all of the Transferred Employees will be the only employees of RGMP at the branch or sub-branch at which they work. Accordingly, the transfer of registrations of the Transferred Employees in those locations to DSL on the Closing Date by means of the Bulk Transfer can be implemented in a relatively simple manner without any significant disruption to the registrable activities of the Transferred Employees, DSL or RGMP, and will be easier to administer than having to transfer the registration of each of the Transferred Employees on an individual basis.

23. Allowing the Bulk Transfer of the Transferred Employees to occur on the closing of the transaction will benefit (and have no detrimental impact on) the clients of the Transferred Employees by facilitating seamless service on the part of the Transferred Employees.

24. The Exemption Sought and Derivatives Exemption Sought comply with the requirements of, and the reasons for, a bulk transfer as set out in Section 4.3 of the Companion Policy to NI 33-109 and Appendix C thereto.

25. It would not be prejudicial to the public interest to grant the Exemption Sought and the Derivatives Exemption Sought.

Decision

Each of the principal regulator and the Derivatives Decision Maker is satisfied that the decision meets the test set out in the Legislation and the Derivatives Act (Québec) for the principal regulator and the Derivatives Decision Maker, respectively, to make the decision.

The decision of the principal regulator under the Legislation is the Exemption Sought is granted, provided that the Filers make acceptable arrangements with CGI Information Systems and Management Consultants Inc. for the payment of the costs associated with the Bulk Transfer, and make such arrangements in advance of the Bulk Transfer.

The decision of the Derivatives Decision Maker under the Derivatives Act (Québec) is that the Derivatives Exemption Sought is granted, provided that the Filers make acceptable arrangements with CGI Information Systems and Management Consultants Inc. for the payment of the costs associated with the Bulk Transfer, and make such arrangements in advance of the Bulk Transfer.

"Debra Foubert"
Director, Compliance and Registrant Regulation
Ontario Securities Commission